Preparing for Retirement
What Is an IRA?
An Individual Retirement Account (IRA) is a retirement savings account designed to help you build and grow money for the future. IRAs offer tax advantages and flexibility, making them a popular option for retirement planning at many stages of life.
IRAs can be funded through regular contributions or by rolling over funds from a previous employer’s retirement plan, such as a 401(k).
Traditional IRA
A Traditional IRA allows you to save for retirement using pre-tax dollars in many cases. Contributions may be tax-deductible, and investments grow tax-deferred until withdrawals are taken.
Key points to know:
- Contributions may be tax-deductible (depending on eligibility)
- Taxes are generally paid when funds are withdrawn
- Withdrawals taken before age 59½ may be subject to taxes and a 10% early withdrawal penalty
- Required minimum distributions (RMDs) generally begin at age 73
Roth IRA
A Roth IRA is funded with after-tax dollars, meaning contributions are not tax-deductible. However, qualified withdrawals in retirement are generally tax-free.
Key points to know:
- Contributions can be withdrawn at any time, tax- and penalty-free
- Earnings may be withdrawn tax-free once the account has been open at least five years and the owner is age 59½ or older
- Roth IRAs do not require minimum distributions (RMDs) during the owner’s lifetime
What Is an Advisory IRA?
An Advisory IRA is an IRA that is professionally managed as part of an overall financial strategy. Advisory IRAs are available for both Traditional and Roth IRAs, allowing your investment strategy and account type to work together.
Benefits of an Advisory IRA
- Professional investment management aligned with your goals and risk tolerance
- Ongoing monitoring and portfolio adjustments
- Integration with your broader financial and retirement plan
- Guidance as markets and life circumstances change
Choosing the Right IRA
The right IRA, Traditional, Roth, or a combination of both, depends on your goals, income, and tax considerations. Working with an advisor can help determine how each option fits into your overall retirement strategy.
Are You Ready for Retirement?
Whether retirement is right around the corner or still a few years away, having a plan can make all the difference. Our Retirement Readiness Guide offers a simple starting point to help you feel more confident about what’s ahead.